Volkswagen Becomes The New Sales Leader In The Auto Industry

Volkswagen is currently leading the global auto-sales race, besting Toyota for the top spot for the very first time. However, with five months left before the final numbers for the year are tallied, both automakers will have to overcome
challenges to outsell the other.

The biggest problem facing VW will be cooling demand in China. China is currently the world’s largest auto market, experiencing over a decade of double-digit growth. Volkswagen has capitalized on this, and is banking heavily on growing demand to bolster overall sales.

Unfortunately, sales in China saw a 4 percent dip for the first half of 2015, and in fact, the market may not hit the low 7 percent growth projection given earlier this year. Additionally, Ford projects industry-wide Chinese auto sales to be between 23 and 24 million, down from earlier estimates of 24.5 to 26.5 million. As the largest automaker in China, VW stands to lose the most from a slowdown in the region.

Regardless, VW described its performance this year so far as “satisfactory” given the challenging market environment.

Meanwhile, Toyota seems to be making headway into China, but lost ground in its home market of Japan. The automaker saw 5.02 million units moved in the first six months of the year, a fall of 1.5 percent overall.

Taking up the rear, General Motors will report its sales figures for the year thus far later this week. For 70 years, GM held the honor of most international sales, but lost the title to Toyota in 2008, regaining it briefly following a major earthquake and tsunami that battered Japan in 2011. Last year, GM fell to third place overall in global sales, moving 9.92 million units total. This year, the Renault-Nissan Alliance could nudge GM down to fourth.

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Why it matters

Ranking automakers on pure sales volume isn’t really all that important from a business point of view, but it is a good way to judge how global strategies are panning out.

That’s a slight decrease compared to last year’s numbers, but it’s still ahead of Toyota’s 5.02 million sold over the same time period.

And, of course, there are always the associated bragging rights. Martin Winterkorn, VW’s CEO, has been transparent in his desire to oust Toyota from the top international sales spot by 2018, and given current projections, that goal may be met sooner than expected.

However, we aren’t even into August yet, so things are far from certain. VW sold 10.14 million vehicles last year, with 5.04 million vehicles sold so far in 2015. That’s a slight decrease compared to last year’s numbers, but it’s still ahead of Toyota’s 5.02 million sold over the same time period.

But with a slowing Chinese market, Toyota could very well end up at the top. Compounding this, we find concerns over VW’s quality control in the U.S. So far, North American sales have climbed 6 percent, but VW is slow to capitalize with a dearth of crossovers and SUVs on offer, despite recognition that the high-stance body style is preferred over sedans and hatchbacks.

Conversely, Toyota has said it doesn’t need to be number one in global sales, but continues to produce vehicles at a pace that should see it challenge VW for ranking as number one. The automaker also recently increased its production in the U.S.

It’s hard to say, given how close the two are in sales at the moment, but if I were a betting man, I’d put my TopSpeed bucks on Toyota.

But the Japanese automaker has its own difficulties to overcome. Toyota sold 10.23 million units in 2014, but this year, that number could fall by 1 percent to 10.15 million total.

Part of the problem stems from a slump in sales at home. Although it’s the fourth biggest auto market in the world, sales in Japan are currently hampered by a lingering recession, which is compounded by a new sales tax added just last year.

Who will end up on top? It’s hard to say, given how close the two are in sales at the moment, but if I were a betting man, I’d put my TopSpeed bucks on Toyota. VW is certainly a stout competitor, but with China’s demand falling, I see Toyota swooping in for a second-half victory.